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Google Under Attack in the EU: Microsoft to the Rescue?

As I wrote last week, all the main browsers are jockeying for position in the world of mobile, which is generally recognised as the key future platform. One player that is struggling here is Microsoft: its mobile phone strategy has signally failed to take off, leaving it a minor player alongside the duopoly of Apple and Google. Its tie-up with Nokia is part of its attempt to make its products relevant here, but another important aspect of its counter-attack is through the legal system.

So far, that has mostly taken the form of attempting to insinuate that Android infringes on patents that it holds – although it refuses to specify what those patents might be. A year or two ago, some were suggesting that because of this alleged problem, that Android was in trouble, but it hasn't quite worked out that way: Android is storming away in every part in the world, particularly in Asia, where it is attaining stratospheric levels of market share.

That kind of dominance may be great for Android and Google, but potentially it represents a monopolistic state of affairs that could be abused, to the detriment of the user. That's certainly what a new organisation called FairSearch believes according to a new complaint it has filed with the European Commission [.pdf]:

FairSearch.org has filed a complaint with the European Commission laying out Google's anti-competitive strategy to dominate the mobile marketplace and cement its control over consumer Internet data for online advertising as usage shifts to mobile.

Google's Android is the dominant smartphone operating system, running in 70% of units shipped at the end of 2012, according to Strategy Analytics. Google also dominates mobile search advertising with 96% of the market, according to eMarketer. The complaint says Google uses deceptive conduct to lockout competition in mobile.

"Google is using its Android mobile operating system as a ‘Trojan Horse' to deceive partners, monopolize the mobile marketplace, and control consumer data," said Thomas Vinje, Brussels-based counsel to the FairSearch coalition. "We are asking the Commission to move quickly and decisively to protect competition and innovation in this critical market. Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google's Android operating system."

Here's the specific complaint:

Google achieved its dominance in the smartphone operating system market by giving Android to device-makers for ‘free.' But in reality, Android phone makers who want to include must-have Google apps such as Maps, YouTube or Play are required to pre-load an entire suite of Google mobile services and to give them prominent default placement on the phone, the complaint says. This disadvantages other providers, and puts Google's Android in control of consumer data on a majority of smartphones shipped today.

Microsoft was accused by its competitors of using its dominance on the desktop to monopolise the burgeoning online marketplace by requiring partners to offer Internet Explorer, rather than the rival Netscape Navigator, and to grant it "default placement " on the desktop. Microsoft's bundling of Internet Explorer with every copy of Windows was regarded as giving it an unfair advantage over other browsers; its rivals claimed there was a danger that Microsoft might repeat its "desktop abuses of dominance" as consumers increasingly turned to an Internet platform dominated by Microsoft's Internet Explorer.

The closeness of the parallels might lead you to believe that the FairSearch group are trying to build on the earlier, successful anti-trust action to bolster their case. But what's interesting is that among the FairSearch group is Microsoft itself. So I thought it might be interesting to see what the company said when it faced exactly the same accusations that it is now levelling against Google. Here are the central arguments it used when responding to the initial US Department of Justice petition:

The marketplace – not the DOJ – should determine how operating systems are designed. If the DOJ had halted the evolutionary process of operating system development ten years ago, consumers would have been denied the benefits of all the innovative work that Microsoft and its competitors have done in making computing more accessible, efficient, robust and fun.

And:

Consumers want Internet-related technologies in their operating systems, and Microsoft is striving to meet that demand. There is nothing special about the Internet Explorer element of Windows 95 in this regard. Microsoft has been including progressively more and more features in its operating systems for the last sixteen years

Of course, that line of thinking could be applied to Android: surely, following Microsoft's logic, it is for the marketplace, not the European Commission, to determine how mobile operating systems are designed? And there is nothing special about the inclusion of Google's services as part of Android: Google has been progressively adding more and more features in its operating system since it was launched....

A year later, in August 1998, Microsoft called for the anti-trust lawsuit to be dismissed. In a statement, William H. Neukom, Senior Vice President for Law and Corporate Affairs at Microsoft, is quoted as saying:

"Microsoft's integration of Internet technologies into the operating system has been good for consumers and good for thousands of independent software companies," Neukom said. "Microsoft and Netscape have been competing vigorously, developing improved software and distributing it widely to customers. The antitrust laws encourage such competition, which benefits consumers."

The same is true of Android's integration: it's been great for consumers and for the thousands of independent software companies writing apps for it. Google has been competing vigorously, albeit not much with Microsoft, developing improved software and distributing it widely to customers. So, by Microsoft's own logic, what's the problem?

That same point was picked up by no less a person than Bill Gates, speaking in December 1998:

Microsoft Chairman and CEO Bill Gates told reporters today that the government's antitrust lawsuit benefits Microsoft's competitors, not consumers, and could end up undermining the future of the entire high-tech industry. Speaking via satellite from Microsoft's headquarters in Redmond, Wash., Gates appeared at a media briefing in Washington, D.C., which was conducted by Microsoft's legal team. As part of the briefing, Microsoft handed out a document titled, "A Case of Trial in Error: The Microsoft Antitrust Lawsuit," which provides a detailed analysis of evidence in the trial to date and of the government's inability to prove its case.

"Consumers aren't complaining about our Internet products - our competitors are complaining," Gates said in a statement. "Consumers and software developers are seeing tremendous benefits from our commitment to the Internet. It's unfortunate that the government is listening to the alliance of IBM, Sun, AOL and Oracle and ignoring all the ways our efforts to help consumers have moved forward."

Once again, this seems to apply to the current situation: it's Google's competitors, not consumers, who are complaining to the European Commission, for exactly the reasons that Microsoft dismissed so vehemently a decade and a half ago.

Of course, it's worth noting that Microsoft lost, and was found to be abusing its monopoly position on the desktop, so maybe Google shouldn't use the same logic in trying to fend off the current complaint. Maybe it doesn't need to, because the details of the situation are rather different: Microsoft was completely dominant on the desktop, whereas by FairSearch's own figures, only 70% of smartphones currently being shipped come with Android.

Is that a monopoly? Well, that's for the European Commission to decide, but I imagine Google will point to Apple's extremely strong position in Europe, not least in terms of profit: one sign of a monopoly is the ability to charge prices above those that the market would normally bear. That's sounds like a description of Apple, with its fabulous profits from iPhones, rather than Google.

But frankly, the financial side of things doesn't really interest me. Nor do I care much about what happens to Google as a result of this complaint – it might even be good for it to be slapped down a little. The key difference between what Google is doing now and what Microsoft was doing in 1997, is that Windows was and is resolutely closed; Android, by contrast is mostly open – not as much as I'd like, but certainly more than Windows on any platform.

That means that anyone can take Android and fork it, which is exactly what is happening, with things like Amazon's Kindle and the huge range of almost-Android operating systems that are coming out of China and looking to take over the world. Microsoft should be far more worried by what is happening in hundreds of young and ambitious companies in the ascendant Middle Kingdom, rather than what a middle-aged Google gets up to the declining European Union.

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